Lately, we have been receiving a lot of questions from our clients about non-resident taxes, thus we have decided to compile all the information about Spanish property taxes into one article.
First of all, let us understand a very important concept such as tax residency, also known as fiscal residency or residence for tax purposes.
To determine whether or not you are a resident for tax purposes in Spain, any of the following factors have to apply:
- You spend more than 183 cumulative days in Spain in a calendar year.
- You are a tax resident in another country. You may have to provide a special certificate issued by the tax authorities in the country of your residence.
- The actual physical location of the main source of your income (your company or your rental home).
- You have underage kids who live and/or study in Spain and/or other dependent family members.
If you own a property in Spain, you must pay the following taxes:
- personal income tax (IRPF – Impuesto sobre la Renta de las Personas Físicas) or non-resident income tax (IRNR – Impuesto sobre la renta de no residentes);
- local property tax (IBI – Impuesto sobre Bienes Inmuebles);
- wealth tax (Impuesto sobre el patrimonio).
Personal income tax. This tax is paid by Spanish residents and has a progressive tax rate starting from 19% and up to 45% (for revenues from 60.000€ and more). You need to file a tax return every year.
Local property tax. This tax is calculated based on the cadastral value of a property. The tax rate is determined by the municipality (town hall) in which the property is located and can range from 0,4% to 1,3% for urban real estate. Payable every year. Owners get a bill once a year from the tax agency called SUMA.
Tax on income for non-residents. If you are non-resident for tax purposes in Spain, then instead of filing and paying IPRF, you will be required to pay a special tax on income for non-residents called IRNR (Impuesto sobre la renta de no residentes).
This tax is payable on all income received by non-residents in Spain. For EU residents, the tax rate is 19%. For non-EU residents, the tax rate is 24%.
Not all homeowners are aware, but you are required to pay IRNR even if you don’t earn any rental income on your home. Taxable base is calculated as follows:
- 1,1% from the cadastral value if the property was revalued after Jan.1, 1994 or
- 2% from the cadastral value if it was revalued before Jan.1, 1994.
For a better understanding of how IRNR is calculated, here are a few examples.
Example 1. In 2016 you were a tax resident of Belgium and an owner of an apartment in Spain. You did not rent out the property. Cadastral value of the apartment: 100 000€. The property was revalued after 1994.
Your deemed income for the year:
100.000 * 1,1% = 1100€
Payable income tax:
1100 * 19% = 209€
Example 2. In 2016 you were a tax resident of Belgium and an owner of an apartment in Spain. You rented out the property for 90 days and your rental income for the year was 3000€. Cadastral value: 100.000€. The property was revalued after 1994.
Your rental income:
3000 * 19% = 570€
Your deemed income for the year proportional to the number of days the property was not rented out:
1100€ * 19% * 275 days/365 = 157€
Total payable income tax:
570 + 157 = 727€
This payable income needs to be filed using Form 210 and needs to be paid before December 31 for the year before. That is, the tax for 2018 needs to be paid before Dec.31, 2019.
Attention! The law allows deducting expenses from rental income only for EU residents. These expenses must be directly related to the rental income generated from a property in Spain.
This tax is equally paid by both residents and non-residents on properties, the value of which exceeds 700.000€. The tax rate depends on the region and ranges from 0,2 to 2,5% from the cadastral value. This tax is filed using Form 714.
Taxes when selling a property
Capital gains tax
When a non-resident sells his property in Spain, he must pay a capital gains tax (ganancia patrimonial) on the profit from selling his home.
This tax forms part of the IRNR (non-resident income tax) and is filed on the same annual tax return using Form 210.
Additional information. Spanish residents also pay a capital gains tax but as part of their IPRF tax return. Residents and also taxpayers from EU, Island and Norway may be exempt from paying this tax when selling their principal residence (a home where you lived for more than 3 years) and reinvest the money obtained from the sale into a new principal home. However, you must reinvest all the money received or you will be taxed on the difference. This latter rule is applicable to capital gains received by taxpayers from EU, Island and Norway from Jan.1, 2015 and on.
The profit is calculated as the difference between the initial cost of your home and its sales price. The initial cost is updated using a special coefficient depending on the year in which you purchased the property. The tax rate applied is 19% (starting from the year 2016).
Non-resident sellers will pay this tax when selling their property. The purchaser will withhold 3% of the purchase price (which means the owner will only receive 97% of the sale price) and pay it to the Spanish tax office using Form 211 within one month from signing the public deed. The purchaser will then present the owner the filed Form 211 so the owner can file his own tax return using Form 210 (needs to be filed within 3 months after the purchaser filed Form 211 and paid the 3%).
If the withheld amount exceeds the actual capital gains tax or there was no capital gain, the seller will get a refund from the tax authorities.
Plusvalia is a municpal tax on the increase in urban land value (Impuesto sobre el Incremento del Valor de los Terrenos de Naturaleza Urbana) charged by the town hall and paid by the seller. This tax needs to be paid to the town hall within 30 days after the sale took place.
For non-resident sellers, plusvalia is withheld from the selling price and paid by the buyer on the seller’s behalf.
The amount of this tax will depend on the following factors:
- The cadastral value of land
- The number of years you owned the property
- A coefficient of increase in urban land value and a tax rate determined by the town hall.
Property tax for companies
Non-resident companies that own a property in Spain are required to pay a special property tax. Starting from 2013 this applies only to non-resident offshore-based companies. The tax rate is 3% of the cadastral value of the property.
Who is exempt from this tax:
- Governments and government institutions and international organizations;
- Companies whose activity is different from simply owning and/or renting out properties;
- Companies trading on official secondary markets of securities.
This tax must be filed annually using form 213.
Get a consultation
You can get any additional consultation on taxes in Spain from the specialists of Costamonitor.es